Did you know?

Non-competition agreements are fraught with pitfalls if not drafted correctly. Fenstermacher and Associates, P.C. has extensive experience in advising local businesses in how to protect their client lists and trade secrets.

Are Your Independent Contractors Independent Contractors?

It is at times a wise business decision to utilize independent contractors rather than employees. The benefits are many, including reducing the amount of Social Security taxes you pay, eliminating the need to provide employee benefits, eliminating the need to withhold taxes and the resulting administrative costs, as well as a shield from liability for acts performed in the course of their duties. However, simply calling one who performs services for you an independent contractor does not make him such.

An independent contractor differs from an employee in various ways. The most telling factor is the hiring party’s level of control asserted over the manner and means by which the work is accomplished. Other factors to consider are: the skill required by the worker; the source of tools or materials needed to accomplish the task; the location of the work; the duration of the relationship between the parties; the hiring party’s rights to assign additional projects; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether work performed is part of the hiring party’s regular business; and whether the hired party works for other entities.

These factors are in no way an exhaustive list of the elements of the relationship. Each situation must be looked at on a case-by-case analysis.

There are certain liabilities which may occur should it be determined that your independent contractors are actually employees. A business is, generally, not liable for tortious acts of independent contractors. However, courts will review the specifics of the relationship and could classify the workers as an employee, not an independent contractor. In that situation, the employer may be held vicariously liable for conduct of an employee acting within the scope of his employment.

A business may also be assessed interest and penalties for failing to withhold payroll taxes. Again, the courts or administrative bodies may determine that the independent contractors were actually employees. Should that occur, you will be responsible for payroll taxes which should have been withheld, as well as interest and penalties.

If you are currently utilizing independent contractors, or are looking to hire additional workers, and are unsure how best to structure the relationship, please contact our office with any questions.

News from within the firm

In October, Fenstermacher and Associates, P.C. received notice of approval from the Pennsylvania Historical and Museum Commission for a Gettysburg Campaign - Rupp House historical marker to be erected at the site of our office building on Trindle Road in Mechanicsburg. The marker’s dedication is planned for Spring, 2001!